China takes the helm in augmented reality market

2018 05 16 18 07 1601 Graph Bar 400

Chinese investments into computer vision and augmented reality technologies -- including for medical imaging applications -- have dramatically surpassed those of Europe and the U.S. in recent months, according to a new report from business consultants Digi-Capital.

The firm's analytical study of international investments in the augmented reality market found that investments out of China have hit $3.9 billion (3.39 billion euros) in the past 12 months, whereas North American investments fell to less than $120 million (104.4 million euros) in the third quarter of 2018.

In Europe and the U.S., the amount of deals in the sector has declined gradually this year, dipping by roughly 10% per quarter. This trend has had a notable effect on early-stage start-ups in Europe and the U.S., with the total number of seed investments cut by more than half.

The investments displayed an inverse pattern in China, however, where companies have raised hundreds of millions of dollars in long-term investments (later-stage Series C and Series D rounds), Digi-Capital noted. Collectively, such investments have contributed to a three-fold growth in the past year.

Whether Chinese investors will continue to back domestic companies, while European and U.S. investors do not, is difficult to predict, said Tim Merel, managing director of Digi-Capital. At least in the U.S., it seems that investors are waiting for signs of market traction before dedicating more resources into the field.

"While this could pose an existential threat to some early-stage start-ups in North America, it's also an opportunity for smart money with longer time horizons," he said. "The next six months will determine if this is a long-term trend, but it is the current mental model."

A potentially pivotal area of focus may be the mobile aspect of augmented reality technology, according to Digi-Capital. Many venture capitalists have forecasted that Apple will soon enter the augmented reality smartphone market, which could serve as the turning point for the market as a whole.

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